THE Covid-19 pandemic has created a windfall for a handful of people: it has minted a new billionaire in a span of a few months and added many more billions to the net worths of rubber glove companies’ main owners/shareholders.
Datuk Seri Stanley Thai, Supermax Corp Bhd’s founder has seen his net worth jumping by almost four times from the end of last year.
Thai has seen his net worth increase the most, by some 370%, among his peers from the strong run in Supermax’s share price and market capitalisation in tandem.
He is now a billionaire with a net worth of RM3.16bil from RM672.62mil at the end of last year, having experienced the biggest increase in his net worth among the glove companies’ main shareholders.
Among the reasons for the big jump in fortunes and value for Supermax’s market capitalisation is the fact that the company is also vertically integrated in some parts of the supply chain leading to better net margins.
CGS-CIMB recently said in its report on the company that 40%-50% of Supermax’s gloves are sold under original brand manufacturing via its own distribution centres.
The research house says Supermax can record higher average selling price increases than its peers due to this factor.
In its recently announced third quarter results, Supermax saw its core net profit surging by 105% year-on-year (y-o-y) and 136% quarter-on-quarter (q-o-q) to RM71mil.
Coming in second (see table) is the main shareholder of Comfort Gloves Bhd, Datuk Lau Eng Guang. Lau had seen his fortunes from the glove company rise by some 231% during this pandemic and he is now worth RM408.48mil.
Comfort Gloves recently reported a 9.12% y-o-y jump in net profit to RM10.24mil for its fourth quarter ended Jan 31,2020.
It was reported that this was on the back of a higher quarterly revenue, that rose 6.09% y-o-y to RM138.65mil, and also due to an increase in productivity.
RHB Research, in a note when Comfort Gloves’ results were released, said it expects a busy year ahead for the Taiping-based rubber glove manufacturer.
According to the research house, more capacity could be added for the company following its acquisition of some 39 acres in Perak in 2018.
Comfort Gloves’ financial year 2020 (FY20) net profit of RM33.2mil was within expectations and at 104% of RHB’s full-year estimates.
The main owners of the bigger capitalised rubber glove makers with bigger manufacturing capacity all saw relatively smaller increases in their net-worths in the year-to-date period.
Tan Sri Lim Wee Chai, the founder of the biggest rubber glove manufacturer in the world Top Glove Corp Bhd, had seen some RM7.47bil being added to his personal net worth.
This is an increase of almost 173% from the end of last year.
AmBank Research recently upgraded Top Glove to a “buy” from a “hold” and nearly doubled its fair value on the company’s shares to RM12.23 per share.
The research house had raised its net profit forecasts for Top Glove’s FY20 by 98%, 95% for FY21 and by 20% for FY22 due to increased demand from the ongoing pandemic.
Coming in fourth is the main shareholder of Kossan Rubber Industries Bhd, who is also its managing director, Tan Sri Lim Kuang Sia and his family.
Lim had seen some RM2.91bil added to his personal net worth from the run-up in Kossan’s share price, which is an increase of slightly over 100% from the end of last year.
Hartalega Holdings Bhd’s main shareholder and executive chairman Kuan Kam Hon and his family’s stake in the company is now valued at RM18.24bil.
The Kuan family had seen an increase of almost 89% in their net worth from the end of last year.
Malaysia is the world capital of the rubber glove industry and has the largest cumulative manufacturing capacity due to stable government policies and the ready availability of high quality latex, the main raw material needed to produce rubber gloves.
The rubber gloves industry which was previously marred by an industry oversupply and thinning profit margins has indeed seen a sudden turnaround in its fortunes, bringing an unexpected windfall to its owners.
Malaysian Rubber Glove Manufacturers Association’s (MARGMA) president Denis Low tells StarBizWeek that he had seen demand for rubber gloves becoming “extraordinary” in the past few months as a result of the pandemic.
“Most manufacturers have their order books filled until next year. I expect that after the MCO ends, demand will increase even more as the other industries, such as the food industry, resume their operations in full, ” Low says.
Malaysia supplies some 63% of the current annual global consumption of about 320 billion pieces, according to MARGMA.
While the going is still good amid the continued pandemic worries, the sustainability of the run-up in glove companies’ share prices will finally determine the take home net worth of these firms’ major owners.
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